The world of subnets makes its way into the world of appchains. From the competitive race to innovate and create the world’s fastest blockchain, Avalanche was born.
In an almost Hub-like methodology, Avalanche has built a minimalist model, containing 3 separate layers called “subnets”. These (Subnets) are application-specific blockchains within the wider Avalanche ecosystem. Each subnet can have its own specialization. This has resulted in channels to divide the work amongst the subnets in order to maintain the agility of the primary network.
With a burgeoning DeFi and Gaming Ecosystem, this powerhouse of the blockchain space has made its way to Osmosis.
What is Avalanche?
Avalanche is a multi-chain smart contract platform made for launching decentralized apps, with sub second finality and full support for the Ethereum development toolkit.
Avalanche's core innovation is the introduction of subnets, which resemble the Cosmos' IBC framework. In a similar manner under which Osmosis serves as a semi-permissionless liquidity hub for the Interchain. Applications built on top of the Osmosis chain are able to enhance the user experience while maintaining its computational nimbleness. Avalanche employs a multichain approach and as such, its blockchains are designed to specialize on different tasks such as token exchanges, staking coordination and managing smart contract creation.
The Avalanche Consensus
Avalanche operates its own consensus mechanism, known as the Snowman consensus protocol. The whitepaper written by the anonymous Team Rocket, titled ‘Snowflake to Avalanche: A Novel Metastable Consensus Protocol Family for Cryptocurrencies’. Explains how the Avalanche consensus mixes the Nakamoto consensus (robustness, scale, decentralization) with the benefits of Classical consensus (speed, quick finality, and energy efficiency). This combination resulted in a leaderless, secure, efficient and scalable blockchain.
To understand the Avalanche Consensus it is useful to imagine a crowded stadium, with each individual in possession of a red and blue card. In this stadium, a random sample is taken in which each individual is asked to choose between the red or blue card. The first poll or voting round taken gives a sense of where users are leaning towards. This allows undecided members to vote with the sample’s majority.
Continuous polling continues until a “clear” majority emerges. Snowman is designed to tip in favor of the majority. This allows consensus to be achieved in a scalable and simple manner.
The Subnet Model
This division of labor is key for the high throughput Avalanche is able to deliver. This division allows Avalanche to process more than 4,500 transactions per second and reach finality in under one second. Avalanche consists of three subnets. Here’s each of the subnets and how they work:
Exchange Chain (X-Chain)
The X chain facilitates the creation and exchange of digital assets, as opposed to traditional blockchains where transactions are organized chronologically, or by block height. Avalanche’s X-Chain is a directed acyclic graph (DAG). This means transactions can be processed simultaneously without the need to validate processes individually.
Platform Chain (P-Chain)
The P-Chain coordinates Avalanche's validators and staking mechanism. The P-Chain API allows clients to create subnets, add validators to subnets, and create blockchains.
Contract Chain (C-Chain)
The C-Chain or “Contract” chain is responsible for the creation of smart contracts. It uses the Ethereum Virtual Machine powered by Avalanche, this means developers can seamlessly launch applications into the Avalanche Ecosystem. The C-Chain is where you could view smart contract growth pertaining to DeFi, Gaming, or NFTs.
Each subnet is intended to give validators, developers and users more flexibility and control over their applications. Allowing competing ideas to coexist within the same blockchain, by implementing ideas through various subnets or singular subnets with different sub chains to allow for experimentation to occur within the Avalanche ecosystem.
Osmosis and Avalanche
Avalanche has the fourth largest liquidity in all of crypto. The AVAX token as currency is hosted in a variety of NFT, games and DeFi applications. It is one of the most liquid tokens in the market today, with a total market cap of six billion dollars. The bridging of both these ecosystems is the result of the Osmosis DAO’s growing partnership with the Axelar bridge.
This partnership brings AVAX as well as its EVM compatible stable coin derivatives (Avalanche USDC, Avalanche DAI) to Osmosis. The introduction of the AVAX token to Osmosis brings with it a coveted asset, whose trading has concentrated around centralized exchanges ( $250 Million per day) and Avalanche native DEXs such as Trader Joe. Additionally, with the launch of our recently created 3pool, newfound stablecoin liquidity will be a welcomed addition to the ecosystem opening up a world of possibilities for the Interchain.
If you would like to learn more about the Avalanche and Osmosis ecosystems, be sure to tune into our latest episode of Updates from the Lab.
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